When All-Time Highs Led to Panic... and Sledgehammers

Japanese stocks have been hitting new highs again. And the current bull market has plenty of room to run... [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [DailyWealth] When All-Time Highs Led to Panic... and Sledgehammers By Sean Michael Cummings, analyst, True Wealth --------------------------------------------------------------- In the late '80s, corporate America lived in fear of being swallowed up by "Japan, Inc..." That's what pundits called Japan's post-World War II era of development. It began in 1949... when Tokyo created the Ministry of International Trade and Industry ("MITI"). The ministry's goal was to modernize and advance Japan's economy. MITI worked directly with the Bank of Japan to manage trade and guide investment in sectors deemed "strategic." It worked. For more than 30 years after the war, Japanese government and business moved in lockstep. This threatened the world order and led to an incredible boom in Japanese stocks. A brutal multidecade bust eventually followed. But now, Japanese stocks have been hitting new highs again. And the current bull market has plenty of room to run... --------------------------------------------------------------- Recommended Links: ['Sell Tech, Buy THIS']( A new warning from the man who spotted the Lehman collapse in 2008... the bitcoin crash of 2018... and the Nasdaq crash of 2022: "If you're worried about getting wiped out when the big crash comes, you need to be rushing into this ONE trade immediately," says Dan Ferris. In fact, Warren Buffett, Ken Griffin, Stanley Druckenmiller, Bill Gates, and Jeff Bezos are ALL making this move today. Once you see what's happening, you'll want to do the same. [Full story here](. --------------------------------------------------------------- [Our No. 1 Stock for the Rare 'Millionaire Window' Opening NOW]( According to Wall Street legend Whitney Tilson, an extremely rare window in the markets is about to open. 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No better marriage of government planning and private enterprise has ever been seen. In 1987, the "Japanophobia" grew even more heated. Famously, several U.S. congressmen took to the U.S. Capitol lawn to destroy a Japanese-made radio with sledgehammers in protest of the nation's policies. Take a look... This photo may look absurd in hindsight. But at the time, America's economic anxieties seemed pretty darn reasonable. By 1989, 32 of the world's 50 largest companies were Japanese. And nine of those were Japanese banks – because the nation's asset prices were so bloated. In a word, it was a bubble... one that couldn't last. "Japan, Inc." finally peaked on December 29, 1989. The bubble burst. And the Nikkei 225 Index languished... for decades. Take a look... The Nikkei 225 didn't reclaim its 1989 peak for a generation. Japanese investors know this period of stagnation as the "Lost Decades." All the fear and media hype about Japan's economic dominance came to nothing. It melted away with one of the biggest financial bubbles in human history. And the damage to stocks didn't heal – until 2024... The Nikkei 225 hit all-time highs this year. Japan's share prices are riding high again. But here's the thing... This time, it's a bull market – not a bubble. A repeat of the Lost Decades isn't in the cards. The investment landscape is just too different today compared with 1989... For one, the Nikkei 225 is a much leaner index. Only one company in the index is in the top 50 global companies by market cap – Toyota Motor. Again, that's a far cry from the 32 Japanese businesses that dominated the top 50 companies of 1989. In fact, a large portion of the Nikkei 225 trades for less than book value today... Book value is a measure of a company's total assets minus its liabilities. It tells us roughly what the company would be worth if it were liquidated tomorrow. Today, a full 40% of Japanese stocks are trading for less than the value of their assets. So if there's an asset bubble anywhere in the world, it's not in Japan. In short, Japanese stocks have emerged from the Lost Decades – without heading back into danger. MITI is now long gone. And the market's rise to all-time highs is a strong, fundamentals-driven rally. It has been more than 15 years since the Nikkei 225 found its long-term bottom. Now, it's soaring again. But don't assume the rally is over. This market has plenty of room to run. Good investing, Sean Michael Cummings Further Reading "One-day crashes don't last long for Japanese stocks," Brett Eversole writes. Two months ago, we saw one of the worst single-day crashes for Japanese stocks. But history shows the rally we've seen since then will likely continue... [Learn more here](. "Today, China is shoring up its economy in a big way," Sean writes. China is taking strides to stimulate its economy through a new fiscal regime – and Chinese stocks have rocketed higher. This is likely just the beginning... 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